In a reversal of fortune, the Pound has found itself on the rise against a significantly weaker Euro.
Sterling has appreciated by 0.3% in the GBP EUR pairing, following a Euro-damaging European Central Bank (ECB) press conference. This has left the Pound trading around 1.1262, compared to the earlier rate of 1.1197.
Although the ECB cut its monthly quantitative easing (QE) bond-buying limit from €60bn to €30bn, this wasn’t the start of tapering as economists had expected.
Instead, ECB President Mario Draghi stressed that there was still a long way to go before significant policy tightening, dashing hopes of a continuous stream of QE reductions.
(First published October 26th, 2017)
The Pound has lost some of Wednesday’s gains against the Euro today, falling notably because of poor sales figures.
- GBP EUR rate drops to 1.1197 – EUR GBP trades up at 0.8930
- Pound tumbles on sales slowdown – Worrying implication for future sales stats
- Euro unchanged by German confidence figures – All eyes on ECB press conference
- Will Pound recover on future BoE news? – Euro could rally on Draghi remarks
The Euro has been in a better position, ahead of a significant European Central Bank (ECB) event.
Pound Slides on Alarming Slowdown in UK Retail Sales
The Pound has dropped by -0.3% against the Euro today, following the release of concerning UK data from the Confederation of British Industry (CBI).
The CBI has published sales data for October, which has effectively shown a crash in monthly sales activity.
Summarising the results was Rain Newton-Smith, Chief Economist at the CBI. Newton-Smith said;
‘It’s clear retailers are beginning to really feel the pinch from higher inflation.
While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand’.
In closer detail, the CBI figures suggested that UK consumers are sticking to essential and entertainment spending and avoiding premium foods or shopping sprees;
‘Sales volumes expanded in other normal goods (74%), recreational goods (64%) and hardware & DIY (43%). Meanwhile, sales volumes decreased in specialist food & drink (-32%) and non-specialised goods (e.g department stores (-45%).
Euro Trades Up ahead of Major ECB Policy Meeting
The Euro to Pound gains seen today have not been repeated elsewhere, with the Euro giving a mixed performance against other peers.
The only real data out so far has been a German confidence measure, released by GfK. For the German economy in November, a minimal decline in the confidence index has been seen.
Euro traders are focusing more keenly on this afternoon’s event, however, which will concern the European Central Bank (ECB).
As well as announcing its interest rate decision for October, the bank will also be holding a press conference featuring ECB President Mario Draghi.
The bank isn’t expected to change interest rates, so Draghi will be the star of the show here.
Pound could Fare Worse after Imminent ECB Press Conference
As mentioned above, the next major Eurozone news is due out shortly, when Draghi makes his press conference appearance.
If Draghi turns hawkish and confirms tapering of quantitative easing in the near-future, the Euro could rise even higher against the Pound.
The next UK data won’t be out until the coming Monday, when the Bank of England (BoE) announces its consumer credit figure for September.
This looks at the level of UK borrowing during the month; if it rises significantly then the odds of a rate hike on Thursday might be diminished, leading to a GBP decline.
Current Interbank Exchange Rates
At the time of writing, the Pound to Euro (GBP EUR) exchange rate was trading at 1.1195 and the Euro to Pound (EUR GBP) exchange rate was trading at 0.8931.
